Medical Bills

If they're not showing up on your credit report than you don't have to include them into your DTI.

Thanks for the reply. I was under the impression that debts not listed on your credit report still need to be reported. Is this not accurate?

Hi CG4L,

Your debts would be included in your credit report only when your lender reports it to the credit bureau. If it's not reported, your credit report will not show it.

Thanks

Correct. But don't mortgage DTI qualifications consider obligations that are not on your credit report also, such as a private loan contract? Would medical bills be considered debt not on your credit report but that is material to your DTI?

All your debts would be considered while calculating your debt to income ratio. A private loan as well as the medical bills will be mentioned in your credit report and would be taken into account while calculating dti.

So private loans and debt not listed on your credit report do not need to be disclosed? Is that what you are saying?

If your debts are not mentioned in the credit report, then the lender will not consider them while he calculates your debt to income ratio.

Monthly debts whether on your credit report or not are supposed to be included in the debt ratio calculation.

If they are not on the credit report, the loan officer is supposed to ask you if you have any other dents and he is supposed to report them for mortgage purposes.

A mortgage loan officer may forget to ask or may choose not to include debts that are not on the credit report so that you qualify, however, that would mean the loan officer is not doing his job as he is required to do so.

Thanks for the answer. I thought that was true.

So does that apply to unpaid medical bills you are making payments on (and may for while)? Or do they not get included as they are technically not a loan?

They are included. Alimony and child support are not loans. They are included. Condo monthly maintenance fees are not a loan. They are included. You get the idea. they are included.

Thanks. Good to know. A friend of mine recently bought a new home and told me that the medical bills he has (and it seemed a lot when he described it) were not included in his DTI as they were not "loans" (and were not on his credit report). This guy is an honest guy I trust, so I have a feeling his loan officer/mortgage broker misinformed him. I think that happens a lot it seems.

It is not unusual at all for a debt not on the credit report to NOT be included in the debt ratio calculation. A loan officer often chooses not to include such a debt, calculating the odds of wheteher it will be discovered or not. If not, all is ok. If it is discovered, the loan officer will simply say he was not told about it before. If the mortgage is then not approved because the debt ratio is too high, everybody lost.
The loan officer is supposed to disclose, but, often does not.

Well that's too late for my friend. He already closed on the home last year. I hope everything with him is OK. He is a decent person, who had he been told the truth would have told the loan officer to disclose it. Even so, he did disclose it to the loan officer, who told him he did not need to disclose it, so I would think the loan officer would be at fault if any issues were to ever arise.

Your friend is fine. The loan is closed and no one will check anymore.